Orica
chief executive Ian Smith has written down the value of the company’s Minova mining consumables division by $247 million, but says the impairment charge will not impact earnings guidance.

The explosives maker, which is due to release full-year results on Monday, said on Friday it was taking an asset impairment charge against Minova of $367 million before tax or $247 million after tax.

Mr Smith, who joined the company in February, is not selling the underperforming business, which has been hurt by a softening US coal market.

Orica on Friday forecast a net profit of about $400 million for the 2012 year or $650 million before one-off items.

The forecast was in line with earnings guidance and compared to earnings of $642 million a year ago.

Orica acquired Minova, which sells items such as steel bolts and resin capsules used in ground support systems, for $857 million in 2006 and beefed up the business with the $775 million purchase of Excel Mining Systems a year later.

But it has never achieved the company’s target of an 18 per cent return on net assets and analysts had said the division’s $1.5 billion book value looked too high.

Analysts were tipping a slight decline in Orica’s full-year net profit before one-off items but expect earnings to accelerate in 2013 due to contributions from new projects and a recovery in explosives volumes.

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